BEARISH into first week of fourth quarter

Personally I feel like these are the best of times. The private equity markets are full of liquidity. Semiconductors are ubiquitous, and the PHLX semiconductor index reflects this truth. We are climbing the exponential growth curve of Moore’s law. Winter is coming, my favorite season. It is not like I want to be bearish, but the IndexModel is signalling bearish over the next five trading days.

The model does what I cannot. It follows rules to form a bias. These rules are founded in auction theory and supercharged with high-level statistics generated by Exodus. I built IndexModel. It’s a completely unique approach. For years I struggled to emulate the behaviors of other traders. Now I just trade. It is going well. I’m grateful.

The last time the model flagged bearish was August 12th. That was a successful signal. I named the signal Rose Colored Sunglasses. I give names to things so my brain has a deeper understanding of their meaning. Rose colored sunglasses refers to the behavior seen on the surface of the stock market. The behavior of the four major indices. They paint a rosy picture. Meanwhile, under the surface, Exodus is picking up on some nuance that is not showing up on the charts. Have you ever looked at a grey winter day in the low-income neighborhoods of Detroit with rose colored sunglasses on? They shine baby. The lens transforms the picture. You don’t look at the grayish mud snow and loathe your existence. You stare at the sky and wonder about the future.

I will only be working the short side of the tape inside the NAS100 arena, via $nq_f. I will also hold a proxy short for most of the week with SQQQ. Seeing as Monday is the first day of Q4 (very nice, very clean) my expectation is for some buying pressure early on. If this occurs, I will bide my time, perhaps preparing an elaborate breakfast and watching the Luddites and Tesla homos rage tweet each other. Then, after I’ve had my fill of egged plates and grotesque human behavior, I will sashay into MotherShip and start firing out short sales.

A programming note. I will be attempting this evening to go live on YouTube and adjust the third leg of the quantitative portfolio I manage using Exodus and Motif. I am monetizing Exodus people, live, in full transparency. In four years you will all see that this is my finest work yet. That said, I have been having trouble going live these last two quarters. I plan to be back online around 6-7pm New York to go live. Wish me luck. You can stay updated on the RAUL blog or check my twitter account. I’ll blast out a link once it is available.

One more programming note. My quant strategy has become increasingly popular and despite my best efforts to keep friends and family on track with assuaging all stock picking responsibility to the algorithms, they keep wanting to pick stocks. “Fine,” I said, “we’ll build a Motif that adjusts every 12 months. You can each pick 5-6 stocks.” I am actually hoping this Motif will under-perform my quants, but I’m not sure if that will be the case. My west coast correspondent ROBERTO BREGANTE dropped some fire names. This new Motif goes live tomorrow, Monday, October 1st, 2018. It’s a hype group of stocks so far. I get excited and want to jog around Mothership when I think about these companies. The picks are not finalized, but this is what it’s looking like so far:

SHOP, ADSK, PRLB, OKTA, CRM, MSFT, ALGN, MTCH, GOOGL, GS, ADBE

The model is bearish. I feel bullish. My disposition is the sunniest it has been in years. So I have to be a happy and optimistic bear. The model is the model is the model. The only apocalyptic talk I can muster on this lovely Sunday is that floods are coming. You’ve destroyed our planet and while good people are working to reverse the industrial transgressions committed by the babied boomers, these next several decades will be like pushing a boulder up a slippery mountain.

Best you secure some highland with lots of fresh water.

ciao ciao kiss kiss

Exodus members, the 202nd edition of Strategy Session is live, go check out what I am talking about.